Construction input prices climb 11.2% annually, fastest in nearly four years

Overview

Updated Oct 21

Construction materials cost 11.2% more than a year ago, the fastest annual increase in nearly four years, according to Associated Builders and Contractors. A broader Associated General Contractors measure that includes services put the rise at 11.9% for new nonresidential work.

Fuel and metals drive most of it. Diesel is up 115% over 12 months, steel mill products about 28%, and aluminum and copper also jumped after tariffs of up to 50%. Suppliers' steel order books are full through spring 2027, and more than a quarter of contractors expect profit margins to shrink.

Why it matters

Every new building and highway now costs 11% more to build than a year ago, and contractors are absorbing the gap.

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Key Indicators

11.2%

12-month construction input price increase

September 2026 vs. September 2025, the largest annual jump in nearly four years, per Associated Builders and Contractors.

11.9%

12-month increase, new nonresidential construction (AGC)

Associated General Contractors' measure, which includes services, September 2026 vs. September 2025.

115.2%

12-month diesel fuel price increase

Diesel more than doubled over the year; it rose 24.2% in September, according to Construction Metrics.

27.6%

12-month steel mill products price increase

Structural steel is scarce, with supplier order books full through spring 2027.

55%

Contractors reporting canceled or postponed projects

From AGC's summer survey; one-third of respondents blamed rising costs.

Voices

Curated perspectives — historical figures and your fellow readers.

People Involved

Anirban Basu

Chief Economist, Associated Builders and Contractors

Publishing monthly analyses of construction input prices

Ken Simonson

Chief Economist, Associated General Contractors of America

Reported on Oct. 15 that new nonresidential construction input prices rose 11.9% annually

Organizations Involved

Associated Builders and Contractors (ABC)

Trade association

Publishes monthly construction input price analyses

National construction trade group representing merit shop (non-union) contractors.

Associated General Contractors of America (AGC)

Construction trade association

Reported 11.9% annual input-price increase on Oct. 15; calls for tariff relief

National trade group for commercial construction firms.

U.S. Bureau of Labor Statistics (BLS)

Federal statistical agency

Publishes the Producer Price Index underpinning the cost data

Federal agency that compiles the Producer Price Index, tracking what domestic producers receive for their goods.

Timeline

2025 October 2026

6 events Latest: October 16th, 2026 · 4 weeks ago

Tap a bar to jump to that date

October 2026
Construction Dive reports the annual price jump
Latest Report

The 11.2% annual increase is confirmed as the largest in nearly four years.
October 16th, 2026
BLS releases September PPI data
Data Release

Construction input prices up 2.2% monthly and 11.2% annually, the fastest in four years.
October 15th, 2026
AGC puts nonresidential input inflation at 11.9%
Report

The trade group said price increases had spread from fuel and metals to other goods, with diesel up 115% and steel mill products up 28% over 12 months.
October 15th, 2026
September 2026
AGC survey finds widespread project disruptions
Report

55% of contractors report canceled or postponed projects; input costs up 8.9% annually.
September 10th, 2026
February 2026
Construction input price climb begins
Data

After months of flat readings, the goods index starts rising month over month.
February 2026
2025
Trump administration introduces metal tariffs
Policy

Tariffs on steel and other metal products begin pushing up construction input costs.
2025

Scenarios

Construction input costs cool below 5% annual by spring 2027

Possible Resolves by Q1 2027

Discussed by: Construction Metrics analysts note the goods index rose 10.8% since January and flag that the pattern could reverse if demand cools

A truce or de-escalation in the Iran conflict pulls crude and diesel prices down, while trade negotiations ease metal tariffs or soften their impact through exemptions. Soft demand outside data centers keeps materials from retightening. Monthly producer price readings flatten and the annual rate falls below 5%.

Construction input costs push past 15% annual by spring 2027

Possible Resolves by Q1 2027

Discussed by: AGC economists flag steel order books full through spring 2027 and producers refusing new customers

The Iran conflict deepens or spreads, keeping fuel prices elevated, and tariffs stay in place. Steel shortages worsen as suppliers' order books stay full. Contractors with fixed-price work booked before February absorb the hit, and new bids carry big escalation clauses. The annual input-price rate tops 15%.

Project cancellations spread beyond 6 in 10 contractors

Likely Resolves by Q1 2027

Discussed by: AGC's summer survey already found 55% reporting canceled, postponed or scaled-back projects, with one-third blaming costs

As materials stay expensive and delivery times stretch, more owners pull the plug on planned work or push starts into 2028. A follow-up AGC survey shows the share of contractors reporting disruptions climbing past 60%, with cost and availability both cited. Data-center work keeps going, but broad commercial building slows.

Historical Context

3 moments from history that rhyme with this story — and how they unfolded.

2020-2022

Post-pandemic construction cost spike (2020-2022)

Lumber futures more than tripled from spring 2020 to May 2021 as homebuilding demand collided with mill shutdowns and shipping snarls. Steel, copper and PVC prices followed, and builders faced record input-cost inflation.

Then

Contractors added escalation clauses and slowed bids; some projects stalled.

Now

Prices crashed back as mills restarted and the Federal Reserve raised rates, showing how fast an input spike can unwind.

Why this matters now

It is the recent template for a construction-specific cost surge, and for how normalization arrives when supply recovers and demand cools.

October 1973-March 1974

OPEC oil embargo (1973-1974)

OPEC cut oil shipments to the US after Washington backed Israel in the Yom Kippur War. Crude prices roughly quadrupled within months, driving up diesel and material costs throughout the economy.

Then

Energy prices cascaded into broader inflation, including construction costs, and helped push the US into recession.

Now

Fuel-driven cost shocks became a recurring feature of construction economics.

Why this matters now

A geopolitical energy shock feeding directly into construction input prices is the same mechanism driving today's diesel surge from the Iran conflict.

March 2018-2019

Section 232 steel tariffs (2018)

The first Trump administration imposed a 25% tariff on imported steel and 10% on aluminum under Section 232, citing national security. Structural steel prices rose and builders saw higher bid costs.

Then

Some projects absorbed higher steel costs; contractors sought exemptions.

Now

The tariffs largely stayed in place for years, though the USMCA deal and EU negotiations adjusted some terms, showing tariff policy can be eased through negotiation.

Why this matters now

Today's metal-cost climb repeats the 2018 pattern, and 2018 showed the tariffs can be relaxed through trade talks.